Agreement in Principle Made to Settle Majority of Zyprexa' Litigations

When Zyprexa first went on the market in 1996, it contained warnings to physicians that the drug carried a rare risk of inducing hyperglycemia and diabetes. However, the FDA later asked all manufacturers of atypical antipsychotic medications, like Zyprexa, to add new warnings to their labels. In March 2004, Lilly sent a letter to doctors stating that it was updating its prescribing information to include the warning that “[h]yperglycemia, in some cases extreme and associated with ketoacidosis or hyperosmolar coma or death, has been reported in patients treated with atypical antipsychotics including Zyprexa.”

The letter went on to point out that patients with schizophrenia are known to be more prone to developing diabetes than is the general population, and that the general population was increasingly becoming more likely to develop diabetes, due in part to the obesity epidemic. Doctors were advised in the letter to take into account a patient's risk for developing diabetes before prescribing Zyprexa, and to monitor more closely those with risk factors such as a family history of diabetes or obesity.

Most of the suits against Lilly claimed that these increased warnings, while accurate, should have been made earlier and that Lilly failed to warn of this known risk.

The Settlement Agreement

The agreement provides that Lilly will set aside a fund of not more than $690 million to pay plaintiffs who agree to settle. The number of claimants covered by the agreement is expected to be about 8000, including federal and state claimants and as yet uncertified class-action claimants. This number comprises approximately 75% of the currently outstanding Zyprexa suits. As part of the agreement, claims against physicians and other health care providers who were joined as co-defendants with Lilly will be dismissed.

“While we believe the claims are without merit, we took this difficult step because we believe it is in the best interest of the company, the patients who depend on this medication, and their doctors,” said Sidney Taurel, chairman, president and chief executive officer of Eli Lilly and Company, in a statement. “We wanted to reduce significant uncertainties involved in litigating such complex cases. Our decision to resolve these claims does not change the fact that Zyprexa has [improved] and will continue to improve the lives of millions of patients around the world who are suffering from schizophrenia and bipolar disorder. This settlement will enable Lilly to focus first and foremost on addressing unmet medical needs through research, educational programs and partnerships with doctors and patients.”

Christopher Seeger, lead plaintiff attorney of SeegerWeiss LLP, stated “The patient population to which this drug is given has difficult medical histories. Protracted litigation was in no one's interest.” June 9/PRNewswire-FirstCall.

The 25% of cases that are not part of the settlement will be vigorously defended, according to a statement from Lilly representatives.

Eli Lilly and Company announced on June 9 that it had agreed in principle to a settlement with most of the plaintiffs involved in the Zyprexa liability litigation. Eli Lilly, an Indiana company, expects to take a pretax charge of at lease $700 million in the second quarter of 2005 to cover the settlement costs.

The majority of the plaintiffs in the Zyprexa litigation asserted they had developed diabetes as a result of their use of Zyprexa to treat schizophrenia, acute mixed and manic episodes of bipolar I disorder and maintenance treatment of bipolar disorder. Zyprexa has been prescribed to more than 17 million people worldwide.

Increased Warnings

When Zyprexa first went on the market in 1996, it contained warnings to physicians that the drug carried a rare risk of inducing hyperglycemia and diabetes. However, the FDA later asked all manufacturers of atypical antipsychotic medications, like Zyprexa, to add new warnings to their labels. In March 2004, Lilly sent a letter to doctors stating that it was updating its prescribing information to include the warning that “[h]yperglycemia, in some cases extreme and associated with ketoacidosis or hyperosmolar coma or death, has been reported in patients treated with atypical antipsychotics including Zyprexa.”

The letter went on to point out that patients with schizophrenia are known to be more prone to developing diabetes than is the general population, and that the general population was increasingly becoming more likely to develop diabetes, due in part to the obesity epidemic. Doctors were advised in the letter to take into account a patient's risk for developing diabetes before prescribing Zyprexa, and to monitor more closely those with risk factors such as a family history of diabetes or obesity.

Most of the suits against Lilly claimed that these increased warnings, while accurate, should have been made earlier and that Lilly failed to warn of this known risk.

The Settlement Agreement

The agreement provides that Lilly will set aside a fund of not more than $690 million to pay plaintiffs who agree to settle. The number of claimants covered by the agreement is expected to be about 8000, including federal and state claimants and as yet uncertified class-action claimants. This number comprises approximately 75% of the currently outstanding Zyprexa suits. As part of the agreement, claims against physicians and other health care providers who were joined as co-defendants with Lilly will be dismissed.

“While we believe the claims are without merit, we took this difficult step because we believe it is in the best interest of the company, the patients who depend on this medication, and their doctors,” said Sidney Taurel, chairman, president and chief executive officer of Eli Lilly and Company, in a statement. “We wanted to reduce significant uncertainties involved in litigating such complex cases. Our decision to resolve these claims does not change the fact that Zyprexa has [improved] and will continue to improve the lives of millions of patients around the world who are suffering from schizophrenia and bipolar disorder. This settlement will enable Lilly to focus first and foremost on addressing unmet medical needs through research, educational programs and partnerships with doctors and patients.”

Christopher Seeger, lead plaintiff attorney of SeegerWeiss LLP, stated “The patient population to which this drug is given has difficult medical histories. Protracted litigation was in no one's interest.” June 9/PRNewswire-FirstCall.

The 25% of cases that are not part of the settlement will be vigorously defended, according to a statement from Lilly representatives.